I’ll have mine with a twist of lemon

Two of the main aspects of “money” are a medium of exchange and a measure of value.

In Economics, Cliff’s Notes provides a good definition: “providing a common measure of the value of goods and services being exchanged. Knowing the value or price of a good, in terms of money, enables both the supplier and the purchaser of the good to make decisions about how much of the good to supply and how much of the good to purchase.”

But it seems in recent times, other items or common purchases have become a measure of value in themselves.  One of these, especially lately, seems to be a cup of coffee.

It seems that every day, we are enticed to buy things on TV, radio or print advertising for “less than the daily price of a cup of coffee”.

For example, many types of insurance can apparently be had for less than the price of a cup of coffee per day.

But how much does this represent, and does it make sense to make this comparison?

A recent survey by Coffee Machine Maker Gilkatho provides the answer.

In Australia, the average price of a take-away coffee is $3.47.  A little more if you live in Qld or WA, and a little less if you live in Sydney.  In fact, in a strange departure from the Sydney cost-of-living norm, Sydney actually has the cheapest average coffee price of all the capital cities, a mere snip at $3.28.

Here are the figures:

CITY                       PRICE

Sydney                  $3.28

Melbourne                   $3.36

Canberra                    $3.38

Adelaide                $3.44

Brisbane                $3.47

Perth                        $3.87

According to IBIS World, Australians spend more than $1b per year on coffee. This includes coffee purchased for home use as well as the “take-away” or “dine-in” barista coffees.

By the way, Gilkatho suggests the average cost of ingredients for a take away coffee is just 35 cents, so you’re paying quite a bit extra for the skills of the barista and the ambience of the shop….

So, back to the measure of value – how many of us really do have a take-away coffee every day?

A recent Roy Morgan Research paper indicated that 10.4 million Australians consume coffee in an average week, and there is a growing trend towards more barista-made coffees.

54% of Australians (up from 51% previously) went to a café for a coffee or tea in a defined 3 month period, and the average number of visits in that time increased from 7  to 8.

Commenting on the study, Norman Morris of Roy Morgan Research, said:

“Interestingly, Victoria narrowly lead the nation for cafe visits, with 58% of Victorians visiting a café for coffee or tea in an average 3 month period, followed by NSW (55%), WA (53%), Queensland (52%), Tasmania (51%) and South Australia (49%), supporting Victoria’s reputation as the nations ‘coffee capital’.

So – let’s look at a little maths.

Of the population that do go out for coffee, they spend, on average,  $3.48, 8 times in a 3 month period, which is $111.36 per year.

But if they all really did buy a barista-made cup of coffee per day (including weekends) that would be 365 x $3.48, which is over $1250 per year.

So, yes, in effect you could buy lots of things for the price of a cup of coffee per day, even a pretty good short holiday if you saved that money over a year or so.

But, as a measure of value and medium of exchange, I think I’ll stick with real money, for now.